Corporate growth and the unexpected triumph of central planning

The American Economic Review tells us large corporations are taking up a larger share of our GDP ...

The American Economic Review, Vol. 21, No. 1, pp. 10-42

The Growth in the Relative Importance of the Large Corporation in American Economic Life

...  If recent rates of growth were to continue, 80 per cent of non-financial corporate wealth would be in the hands of 200 corporations by ...

... Six industries can boast of one or more "billion dollar" companies ...

Yeah, that said "billion", not "trillion". The article was published in March 1931, so it was presumably written after the crash of '29 but before the full horror of the Great Depression was recognized.

81 years later the Economist has an update:

Free exchange: Land of the corporate giants | The Economist 11/2012

... Businesses have also been getting bigger. A snapshot of the American economy shows huge dispersion in firm size: around a third of American workers are employed by one of the 6m small firms with fewer than 100 workers, and another third are employed by one of the 980 large firms that have over 10,000 workers. But the long-run trend seems to be towards bigger companies. In a 1978 paper Robert Lucas of the University of Chicago documented how average firm size in America had increased over a 70-year period (see left-hand chart)...

... In the past 15 years the assets of the top 50 American companies have risen from around 70% of American GDP to around 130% (see right-hand chart). All of the top ten American firms have been involved in at least one large merger or acquisition over the past 25 years...

...  If size does not keep driving down costs, why do big firms keep expanding? One possibility is that they are seeking to boost profits not by driving down costs but by raising prices. Buying up rivals softens competition and enables firms to charge more...

Accelerated consolidation seems like a predictable outcome of very low interest rates and very high risk aversion [1]; an unintended consequence of economic stimulus and at the zero lower bound. If so, it's a winner-take-all result in a political-economic tax, law and accounting environment fashioned by large corporations for large corporations.

Size can be used to purchase competitors, but it has many more non-market advantages. Size allows, for example, the capture of regulators and the purchase of legislators. Those advantages allow corporations to grow beyond the bounds of classic microeconomics.

And that,  surprisingly, is how we end up with the unexpected triumph of central planning. 

Central planning triumphs because, even if we ignore regulatory capture and senatorial acquisition, corporations are only capitalist on the outside of the cell membrane. Inside the corporation there are no contracts, no currencies, and no markets. Inside the corporation, we have the hallmarks of Soviet central planning - goals and quotas and commissars and imaginary numbers and dictates from the central commission.

Central planning, of course, has its issues. Persistent and eventually fatal issues. When very large corporations fail though, they take a lot of things down with them. If there are truly systemic dysfunctions associated with corporate size, and if large corporations now subsume a large portion of national economic activity, the impact of these weakened monsters may be considerable. 

See also:

• The Modern Firm - a review 4/2012
• Why do corporations (firms) exist? - Coase and the theory of the firm 10/2010
• Gordon's Notes: Global finance and parasites 9/2009
• The origins of corporate mediocrity - promoting the best 7/2009 - game theoretic limitations to corporate competence
• The Corporation - what next? 8/2010 - links to prior posts
• Troubled capitalism: The corporate entity 8/2010 - science fiction socialists attack
• Ants, corporations and the great stagnation 12/2011
• Speculation: The corporate ecosystem and American stasis 11/2010
• After the crash: The future of the publicly traded corporation 8/2008
• Self sustaining entities: corporations and the Spanish Inquisition 6/2006
• Malice, incompetence, and happy accidents 5/2011 - Classic Dilbert
• Kristof: The market failure of CEO Compensation 3/2004
• SBA.GOV document on small business recover (pdf) 1/2012

[1] Given the way American health care has worked, an aging population may also support increased corporate size.

The Right will drop Climate Change Denialism within the next six months

My prediction for 2013 - the American Right will effectively drop Climate Change Denialism by April of 2013. They'll never admit it of course. They'll act as though they always accepted that human activity was warming the earth and that effete Liberals have been responsible for all inaction.

This is a good thing.

Some may wonder how this could happen so quickly. I used to think it would take longer myself but I've changed my mind.

A year ago I thought this would only happen after a crushing GOP victory, but since then we've seen the GOP make a complete policy reversal on immigration. We've seen Christian evangelicals purge all record of decades of anti-Mormon sentiment. We've seen a hard-right primary candidate morph into an Obama-clone, and his base act as though nothing had changed. We've realized that the GOP elite often believe what they say, and believe they've always believed whatever they now believe.

If you are not anchored to data, and to reality, then it's not hard to change direction. The  U.S. military's preparation for climate change disruption (and climate engineering wars) will be tied to budget requests, and it's hard for the GOP to say no to increasingly large sums of military money. The combination of military requests, electoral defeat, and Sandy are sufficient to precipitate radical realignment.

Don't be shocked if a Carbon Tax, in one form or another, makes it into the 2016 budget process.

XMind: Impressions and comments on the mind mapping market

It's been two years since I first looked at XMind. During that time I used MindManager at work and experimented with MindNode Pro at home. I mostly use the tools to explore new terrain, and as a visual aide to some teleconferences (share the mind map while discussing).

MindManager wasn't ideal, but it was a decent tool when we could buy it for $100 or so. Their current pricing is too high for team use, and I really did want the option of sharing maps. So when I switched projects I also switched to XMind. I don't have time for a proper review, but I can share some bullet points on why I chose it, what it's like, and what I would love to see.

Why I chose XMind

• It runs on Windows 7 and it's nice I can also use it on my Air.
• Price: Free for a very solid version, upgrade to pro was $80 for me. I don't like free software, but we can't afford MindManager - so this freemium model is a good balance.
• Longevity: It's been on the market for several years and just went through a significant update.
• Quality: it's got bugs, but it's tolerable so far.
• It's a simplified clone of MindManager so it has a good feature set.
• The base version is "open source". A weak form of insurance, but could be worse.
• Freemind lacks the corporate look and seemed a steeper learning curve for non-geeks.

Impressions, including problems

• Data lock: The inevitable for all but Freemind
• Java: The UI is native, but the back-end requires Java. That's bad enough on Windows, but for a Mac user Java installation feels like installing a malware-welcome sign.
• There's no built-in Help, only web help.
• It is slow to load what I consider a mid-sized map.
• It is pretty reliable, but I have run into a significant bug with string search. Search sometimes fails unless the map is fully expanded.
• It's made in China, and the language localization is imperfect. "Extend" is used in place of "Expand" for example, and the mouse-over tooltip text is quaint.

Thoughts on the mind map / concept visualization marketplace

 

I've seen cognitive-support apps come and go for twenty years, and I don't think we're making much progress. We're shuffling in place. This definitely isn't a technology problem -- we had similar apps running on the computing-equivalent of medieval tech. I don't think it's due to lack of imagination, though that has occurred to me. I think it's a business problem -- the market for high-end cognitive-extension concept modeling software is tiny; probably not more than 1 in 10,000 adults, perhaps 300,000 worldwide on all computer platforms. If we then ask how many can/will pay $30 a year for a product … we're talking a modest income stream for 1-2 developers owning a world market.

 

Yeah, this is a business problem. So we're not going to get what I want through traditional market-driven mechanisms. We're going to have to figure a way to grow something from modest means, and it's going to have to be built atop something else.

 

So here's how I think it could work. Start with the standard data formats used in other apps like Notational Velocity for the nodes. That means UTF-8 including "plain text", RTF, and markdown with a simple title, tag, date/time and text metadata model. That way the "nodes" can live in a simple Spotlight/Windows Search indexed folder and can be used by SimpleNote or Dropbox.

 

Now put the graph structure as XML or XMLized RDF in just another note in the same folder with a special name.

 

Optionally, allow the folder to contain other files, images, and so on (future).

 

That's the data. Now the app reads in the RDF and the nodes and renders the relationships. Ideally many different apps work with the same data structure. There's very little income here, so we're taking labor-of-love with a bit of cash to pay for a new computer. From this base, over time, with full data portability, we can slowly build a concept-visualization ecosystem with full data freedom.

 

Anyone have other ideas?

See also:

• Gordon's Notes: XMind: Software made in China for OS X and Windows: 11/2010
• » Fix for Xmind missing icon bug. Gordon's shares
• Gordon's Tech: Mac Mind mapping software: Inspiration, OmniOutliner and MindNode 6/11: links to related topics and articles
• Gordon's Tech: Tinderbox, Simplenote, MindNode and data freedom 10/2011

iOS 6.01 Podcast app: Die, Apple, Die.

I had to update to iOS 6 sooner or later, and I knew that meant the Podcast app.

Still, a small part of me hoped that that it wasn't as bad as I heard.

Really, I was in denial.

It's true. All of my Podcast Playlists are gone.

Apple's share price is at 2001 levels -- really, that's not low enough.

Yeah, it's one tiny app that only a few geeks really use -- but we are the geeks that used Playlists and Smart Playlists. This is the kind of colossal screw-up that can't exist in isolation. It's worse than the infamous Maps mess because there Apple had a real business problem.

That podcast silence you hear is the dead canary.

And the big iTunes update is still supposed to be coming ...

Update: Listen to podcasts with Music app on iOS 6 - Mac OS X Hints says you delete the Podcast app and get Playlists back. I had to restart my iPhone with iOS 6.01 for this to work, but it did work.

Update 11/11/2012: After deleting Podcast.app and restarting video pod cats will again appear in Video.app. My kids like those.

Post-election reflection

I don't often pull down my posts for a rewrite, but this one was up for a few hours before I took it down for a rework. Here's the revised edition with a strikeout.
------
My team won the big one. I read my Talking Point, Krugman, and Salmon, so I wasn’t surprised. On the other hand, since I’m a bit mathic,  I wouldn’t have been surprised if Romney had won either. So not surprised, but very grateful.

My team won even bigger in Minnesota. Voter-ID, anti-gay marriage amendment, GOP State House – all gone. I didn’t expect all of that. So there I’m surprised, and very grateful.

I'm grateful to the Obama and Biden families, to Bill Clinton who may have earned some forgiveness for delivering himself to his enemies so long ago, to the Millenials who seem to like voting (and that will change many things), to all the Obama donors big and small, to my friends Kathy and Lin who won their fight, to Paul Krugman who rails against ignorance, to Obama voters, and especially to the campaign team. I listed to Obama’s acceptance speech, and some parts were obligatory filter – but his gratitude to his volunteers and campaign team was very sincere.

I'm also grateful that, despite some dire predictions, most of the white GOP voters I know seem to be going on with their lives without riot. Even those who claimed they'd go Galt may be sobering up, though there may be rare exceptions. It's as though they didn't entirely believe Fox/Rove TV. Certainly Boehner and McConnell didn't -- they went to bed early on election night.

I’m grateful, but I ain’t exactly joyous. I’m not sure entirely why, but it's not hard to list potential contributors.

First there was the tidal wave of stupidity that infested even commercial-free NPR as both parties fought for the allegiance of the inattentive, uninformed, and unmotivated. It felt like pledge week on steroids.

Then there was the partial success of the House GOP's scorched earth policy over the past two years, and the success of the GOP governors' redistricting policies that keep the House Red even when the nation goes Blue.

The GOP's voter suppression tactics were depressing -- and Florida is still a democracy disaster area. (It's time for a federal intervention). Romney's jaw dropping whoppers were much worse than McCain's -- and they never seemed to cost him all that much. His "budget plan" was a bad joke. Overall, the etch-a-sketch worked depressingly well. He ought to have lost by a huge margin, he lost by a few percent.

Dare I mention the billionaires? Yeah, we learned (again) that wealth is no measure of intellect or even cunning, but I suspect they did more harm than we are willing to admit.

Maybe it’s also a primitive tribal responsibility thing. Sadly, I am not a blue-eyed husky mix. Like John Scalzi, I am “the GOP “demographic” down to the last jot and tittle”. So, while I think it would be crazy for President Obama to feel depressed about black men behaving badly, I feel badly that so many of my tribe [2] of very-advantaged relatively-wealthy and somewhat educated white men behaved like fear-infested pithed fleshbots with an etch-a-sketch memory ... made very bad choices.

*Cough*. Yeah, that's the problem sentence. It's a bit ... harsh.

I'd like to know what's going on in the heads of my white folk tribe. To consider that let's set aside the elderly; they are vulnerable and easily manipulated. Let's set aside the cynical wealthy; for them Romney is a logical choice. Let's even assume that a fraction of the GOP (all white) base is truly opposed to abortion on genuine religious or ethical grounds -- and not just using 'pro-life' as a tribal flag. Set them aside. Lastly, set aside the less educated or the white impoverished who are disconnected from the world.[4]

That still leaves a large group of people who should know better, and whose justifications for voting for today's GOP [3] don't make sense. Except that 80% of GOP voters are overtly racist [1].

So maybe I don't really want to know what's going on in the heads of white male GOP voters.

I think I know why I'm not joyous. Grateful though.

[1] I know at least white GOP voter who isn't, and who was still convinced Obama would destroy America. She may be in the same mysterious category as black Republicans.
[2] Really I have several tribes, but I can't escape the male and pigment-deficient one.
[3] Some have stated reasons, but they are either data-free or contradicted by simple data. This doesn't mean it's impossible to rationally vote for any Republican candidate, just not the ones we have now.
[4] GOP voting Libertarians don't get exempted because today's GOP is less "Liberty" friendly than today's Dems. A third party vote is absolutely defensible however.

Apple drive replacement program notification error sends blogger over edge

Update: I got an unexpected Apple email requesting I send a scanned receipt and bank information to get my iMac drive replacement refund. I thought I'd solved this problem two weeks ago!

So I wrote a snarky blog post (below) and replied with a crabby comment. About 30 minutes later I got a f/u email:

Dear Apple Customer,
The prior communication you received from Apple stating the need for additional information was in error.
We completed your refund for a hard drive replacement as part of the iMac 1TB Seagate Hard Drive Replacement Program.
Refund Amount: 281.25
Credit Memo Number: 111111
Case ID: 11111
Follow Up Number: 111111
You will receive your refund in four-to-six weeks.

So it was a mistake. I wonder how many customers got this, and how many are as cranky and post-election sleep-deprived as I am (and my team won, imagine how cranky I'd be if I voted GOP).
-------------------------------
Original title: Apple's defective drive replacement program: lousy customer service

I wasn't delighted that Apple took a year to admit that my iMac's hard drive was defective, but I was glad to apply for a refund for the replacement I purchased. I received an email asking for bank details, which I sent on.

Today Apple sent me another email asking again for the bank details I'd already sent and for a scanned receipt for a repair that was done by Apple at their store over a year ago:

Dear Apple Customer,
Product Serial Number(s): XXXXXX

Case ID: 11111
Follow Up Number: 1111
Thank you for submitting a refund request. We need a repair receipt and banking details to complete your refund.
Please contact the service center that replaced your hard drive and obtain a receipt, if you do not already have it.
Reply to this email and attach a scan of the receipt. Do not change the subject line.
...
sg1tb_refunds_amr@apple.com

This is lousy customer service.

Update: I asked on Apple's discussion board if others had run into this problem. The post was removed about twenty minutes later, and I received this note:

Apple removed your post titled, "iMac 1TB drive replacement program: Apple gets nasty about refund," because it contained the following:
Non-technical posts
Non-constructive rants or complaints

Well, no complaint there - 'nasty about refund' wasn't the smartest subject line. Still, that was a pretty fast deletion by the standard of past years.

MacBook Air vs. iPad: waiting for the keyboard

When I travel for business I want to have a personal device with a keyboard and 1024+ horizontal resolution in addition to my obligatory corporate laptop. 

I am quite fond of my MacBook Air 11", but it has several limitations for this use case:

1. The power adapter is compact, but still on the large side of portable life.
2. The battery is only good for about 4 hours of use with WiFi enabled.
3. I can't sketch on it.
4. The OS and software suite "expects" unlimited high speed net access.
5. Many OS X apps and especially "non-mobile" web sites are designed for larger than 11" Air screens or expect (yech) Flash.
6. OS X calendar/contact/task software don't sync as well with ActiveSync servers as iOS.
7. Although the Air is very compact, it is a tight fit next to my massive corporate WinTel box

I believe, once the keyboards come out, that the iPad Mini solves these problems:

1. The power adapters is very compact. Since I have to carry a similar adapter for my iPhone it is arguably non-existent.
2. Ten hour battery life.
3. Sketchable
4. iOS runs on ARM and is designed for a power and data constrained environment. (non-Retina screen is a feature here, not a defect.)
5. Apps I use especially web browser and sites fit device specs.
6. iOS is a decent ActiveSync cient.
7. The iPad Maxi with Logitech kb is about the same size as my Air, but the Mini is significantly smaller. On the other hand, there's no Logitech kb for the Mini and no commitment to make one.

I think a Mini purchase meets Gordon's Laws of Acquisition, even without considering its use in other contexts such as a personal device at the office, and as an eBook reader. It might eventually turn my Air into a family machine with an external monitor. The key test though is keyboard support, so I need to play with the Mini at the Apple store and wait until a good case/KB solution emerges.

Minor things that drive me nuts: iCloud is not an improvement over MobileMe

In an otherwise uncontroversial rant about Apple's net service reliability failures I came across a glaring bit of conventional stupidity ...

When is iCloud going to be more reliable? — Erica Ogg

... To be fair, iCloud has been a massive improvement over MobileMe...

No, iCloud hasn't been an improvement. I suspect Erica never used MobileMe, so she's only repeating what she's read elsewhere.

I used MobileMe, and I've used iCloud. MobileMe was very unreliable when it launched, but by the time it ended it was fairly reliable at what it did across both Windows and Mac clients. In part this was because a lot of bugs had been wrung out of the clients and because Apple stopped adding features.

iCloud was a major regression for MobileMe users, not least because Lion was a wreck. Even under Mountain Lion it's probably not as reliable as MobileMe was towards the end -- when Apple stopped trying to sell it.

So will things get better? I'm optimistic, because Apple's share price has been falling as the company is pummeled by bored journalists and geeks alike. This is a good thing; suffering helps humility, and humility may lead to new thinking on customer service and reliability. We don't need radical changes to OS X -- Mountain Lion is a good enough platform for at least another decade. We do need reliability, and thoughtful improvements.

Usability of electronic health records: test cognitive cost first

Obama raised mileage standards for my industry.

Ok, so it wasn’t him personally, and it’s not mileage, and I don’t exactly own the health care “IT” industry. Even so, I can better imagine now what it was like to work for GM in the 70s when mileage standards were first set.

For my industry the ‘mileage standards’ are known as ‘meaningful use’, as in MU1, MU2 and MU3. Despite the confusing name these are effectively increasingly stringent performance standards for electronic health records, akin to mileage and emission standards for automobiles. They’re reshaping the industry, sometimes for better and sometimes for worse. (Should we, for example, measure the value of all of our measuring before we do more measuring?)

The industry has moved through MU1 and is now digesting MU2 with MU3 on the horizon (assuming Obama wins, though Gingrich was a great fan of this sort of thing.) MU3 is still under construction, but one consideration is the inclusion of ‘usability standards’.

For various reasons I’m not thrilled with the idea of setting usability standards, but the term is broad enough to include something I think we really ought to study: The impact of complex clinical documentation and workflow systems on the limited cognition and decision making budget of the human brain…

I’ve written about this before …

Gordon's Notes- Electronic health record use and physician multitasking performance 4/2010

Llamas and my stegosaurus: Living with a limited brain
Some interesting research has come out recently about the processing capacity of brains. For example, that the medial prefrontal cortex can only handle two tasks at once, or that working memory can only handle about 7 items at a time (but what's an item?), or that when people are actively trying to remember something complicated, their impulse control is reduced…

Since then this topic has gotten a bit more attention, particularly from a study of Israeli judges …

Do You Suffer From Decision Fatigue- - NYTimes.com 8/2011

… There was a pattern to the parole board’s decisions, but it wasn’t related to the men’s ethnic backgrounds, crimes or sentences. It was all about timing, as researchers discovered by analyzing more than 1,100 decisions over the course of a year. Judges, who would hear the prisoners’ appeals and then get advice from the other members of the board, approved parole in about a third of the cases, but the probability of being paroled fluctuated wildly throughout the day. Prisoners who appeared early in the morning received parole about 70 percent of the time, while those who appeared late in the day were paroled less than 10 percent of the time…

… Decision fatigue helps explain why ordinarily sensible people get angry at colleagues and families, splurge on clothes, buy junk food at the supermarket and can’t resist the dealer’s offer to rustproof their new car. No matter how rational and high-minded you try to be, you can’t make decision after decision without paying a biological price….

… These experiments demonstrated that there is a finite store of mental energy for exerting self-control. When people fended off the temptation to scarf down M&M’s or freshly baked chocolate-chip cookies, they were then less able to resist other temptations….

Patient care is an endless series of decisions (though over time more behavior, for worse and for better, becomes automatic). All physicians start with a cognitive budget for decision making, and every decision depletes it. Unfortunately using an EHR also consumes decision making capacity – perhaps far more than use of a paper records. There’ve been a few studies over the past fifteen years hinting at this, but they’ve gone largely unnoticed.

So, if we’re going to study ‘usability’, let’s specifically study the impact of various electronic health records on cognitive budgets. We now know how to do those experiments, so let’s put some of that MU3 money to good use, towards supporting tools that enable better decisions – because they’re less tiring.

Think of it as meeting mileage standards through aerodynamic design.

The Chameleon Candidate

Now he's pro-choice:

Norm! | TPM Editors Blog
Romney surrogate Norm Coleman caught on tape assuring Ohio voters that Roe v. Wade is safe in a Romney presidency.

Has any presidential candidate in US history changed his fundamental policy positions as frequently and as radically as Mitt Romney?

It's not a rhetorical question. I'm curious. We live in unprecedented times ...

xkcd: Congress. America's most extreme right wing ever.

Minnesota's Coursera eviction will be reversed

A few weeks ago Minnesota got some app.net attention. Alas, it was because we looked a bit silly ...

Minnesota Gives Coursera the Boot, Citing a Decades-Old Law - Wired Campus - The Chronicle of Higher Education

... The state’s Office of Higher Education has informed the popular provider of massive open online courses, or MOOC’s, that Coursera is unwelcome in the state because it never got permission to operate there...

... Tricia Grimes, a policy analyst for the state’s Office of Higher Education, said letters had been sent to all postsecondary institutions known to be offering courses in Minnesota. She said she did not know specifically whether letters had been sent to other MOOC providers like edX and Udacity, and officials there did not immediately respond to questions from The Chronicle.

But Ms. Grimes said the law the letters refer to isn’t new. “This has been a longtime requirement in Minnesota (at least 20 years) and applies to online and brick-and-mortar postsecondary institutions that offer instruction to Minnesota residents as part of our overall responsibility to provide consumer protection for students,” she wrote in an e-mail....

I asked my illustrious state representative, Michael Paymar, about this. He responded by paper letter (that's the way it works). Briefly the Office of Higher Education will work with legislators to change the law. The Director Larry Pogemiller said that nobody should bother registering and Coursera was fine in Minnesota.

Unsurprisingly this was a well intended law designed to protect students from old-style educational fraud, but it's obsolete now.

How and when will Apple give up on Siri?

I usually wait for my iPhone upgrades, but I was an early 4S adapter. That meant I used Siri when she worked.

She didn't work for very long. Apple couldn't scale the Mathematica code that underpins Siri. Over the past eight months I've seen some good days, but since the iPhone 5 launch the service has been largely worthless for me. Soon the iPad Mini will come and I expect things to get worse.


So how long will Apple keep trying to make Siri work? Maybe it's just a matter of building enough data centers, but perhaps Apple bet on the wrong technology. Maybe it's not economical to scale Siri.

So what can Apple do? What might they be doing now?

Despite my prior comparison to the Newton, things aren't quite as dire as all that. The iPhone is very useful without Siri, and since most of us don't rely onSiri there's not much true functionality to remove. Apple can focus on a few key hands free voice recognition areas and re-implement those partly in iOS and partly on a non-Mathematica server foundation. Scaling can then focus on those key areas. The AI part of Siri can then be treated as a toy -- until Apple can either scale it out or replace it.

I hope they're well along in this process, because I sure would like to be able to set a hands-free reminder or take a memo.

Update: Clark had a good takedown of my Mathematica aspersions. He's right, Mathematica isn't the problem. He says he's in love with Siri, but reading between the lines his experiences aren't really much better than mine. He's just overlooking her flaws after a few dates. Soon he'll be ranting with me.

I suspect iPhone 5 users have a better experience than 4S users thanks to better noise canceling, and I wonder if some users do better based on time zones, carrier, and geographic server assignment. I liked this suggestion:

I suspect they’re going to have to move more of the analysis onto the phone rather than the server. However I bet memory issues are the biggest limit there. What we might find, if this theory is correct, is that Siri will make some drastic improvements as RAM on devices hits 2 – 4 GB and Apple can move more code off the servers.3

Canada travel: Activating a Rogers paygo SIM for your iPhone or other unlocked GSM phone (voice only).

I realized this should have been on my tech blog, so I reposted an updated version there.

Nguyen Chi Thien - the toughest SOB poet that ever lived.

Nguyen Chi Thien Obituary | The Economist: "From 1995 he managed to get shelter in America. He lived humbly in Little Saigon in Orange County, California, lodging with fellow countrymen.".

Read the entire thing. He won an international poetry award in 1985, but nothing more. No Nobel, no Pulitzer.

Electronic health records and payment increases: It's not fraud.

There was a bit of press about an extensive CPI series investigating increases in charges by physicians using electronic health records. I know this domain, and I've been watching for someone to explain what's really happening and why.

Today John Halamka pointed me to what I was looking for. The explanation comes from Don Berwick:

Hospitals grab at least $1 billion in extra fees for emergency room visits | The Center for Public Integrity: 

... Dr. Donald Berwick, the immediate past administrator of the Centers for Medicare and Medicaid Services (CMS), which administers the Medicare program, said a small portion of the billing increase is likely caused by outright fraud, but in the majority of cases hospitals are legally boosting profits by targeting the vulnerabilities of Medicare’s payment system. “They are learning how to play the game,” Berwick said about the hospitals.... 

... Berwick, the former CMS head, said patients haven’t changed. What’s changed is the aggressiveness of how hospitals bill. “They are smart,” Berwick said. “If you create a payment system in which there is a premium for increasing the number of things you do or the recording of what you do, well, that’s what you’ll get.”...

Don't be fooled by his background leading CMS. Berwick has a long record in health reform, and an unimpeachable reputation. He got one year in CMS before the GOP got rid of him. He's telling the truth.

The deeper story goes like this:

• In the 1990s reformers tried to come up with a fair way to reimburse for the work physicians did, particularly 'cognitive' work vs. procedural work. In part they wanted to to equalize the playing field between medicine and surgery. This was a horrendous task even before the AMA got their hands on it.
• By the time the AMA was done a new kind of accounting system was created to track what doctors did. It was called "Evaluation and Management" coding, which looks to the uninitiated like a set of 10 or so "CPT Code" (also AMA controlled).
• This introduction of E&M codes changed medicine -- for the worse. Immediately. I won't bore you with the details, but basically doctors worked to the accounting system instead of focusing on improving patient care. Accounting matters. 
• Four years later proceduralists complained and the E&M codes got much worse. At this point they were almost impossible to understand. There was supposed to be a usability test but it never happened. Somewhat better, but even more complex, codes were stalled in 1999.

After 1999 doctors more or less staggered on with this accounting system. They routinely 'undercoded' to avoid prosecution, but payments for less sophisticated codes rose so it 'worked out'.

During this time, however, electronic record systems grew. It became far easier to capture all the inputs to the coding system. It was also easy to ask a few additional questions and so exploit a loophole in established patient encounters. (Basically you can do a complete exam for a sore toe and do quite well).

EHRs let billing systems, especially hospitals, fully exploit the problems in a fundamentally horrible accounting system.

There's no fraud here. The fix is to eliminate E&M codes.